Underneath all the visionary aspirations for digital transformation, consumer packaged goods (CPG) brands are grappling with a triumvirate challenge: how to balance bottom and top line business demands with sustainable practices that will take them into the future.
“CPG companies are moving systems to the cloud to gain business agility by connecting data to actions company-wide,” said Stuart Wilkinson, industry director at CPG and life sciences at SAP. “They want best practices to standardize business processes because that’s how they’ll achieve operational excellence, increasing efficiencies that lower costs. With centralized data visibility, they can measure, monitor, and reduce the environmental impact of their product supply chain from sourcing through distribution and after.”
Here’s a quick round-up of some of the latest industry analyst predictions for the consumer products industry.
Intelligent data sharing and protection
Personalization may be the watchword for CP companies aiming to delight their customers, but it’s fraught with landmines. For example, IDC analysts predicted 35% of brands will openly incentivize consumers to share personal data in exchange for cash rewards, services, and exclusive experiences by 2024. Yet Gartner analysts predicted that 40% of consumers in the same timeframe will trick behavior tracking metrics to intentionally devalue the personal data collected about them, making it difficult to monetize. It’s not surprising that IDC analysts expected companies to extend their data privacy initiatives to surpass compliance requirements, with 60% of enterprises establishing KPIs regarding the ethical use of data by 2023.
These challenges are important for consumer brands companies regardless of where they are on the value chain. IDC researchers forecast that as early as next year, traditional distribution models will crumble as 20% of businesses in some sectors use technology to go direct to customers, seeking to improve customer satisfaction and product development.
“Direct consumer engagement and selling is non-traditional territory for CPG companies,” said Wilkinson. “Organizations are scrambling to attract employees with B2C skills in the middle of a worker shortage, making cultural shifts along with new technologies to capture these new opportunities.”
In fact, Gartner analysts position cloud as the key driver for business innovation across all industries. As cloud-based platforms become the norm, industry networks will be instrumental for every sector. IDC predicted that by 2024, 40% of manufacturers will share data in their ecosystems (partners, customers, suppliers), improving OEE (operational equipment efficiency) of their factory operations on average by 10%.
Go digital with CX: no more excuses
Accordingly to some analysts, customers will reward brands that relieve their stress. Forrester researchers predicted that, “In 2022, consumers will turn to uplifting, pleasing products and experiences that offer reprieve from the fatigue of ongoing uncertainty.” If these analysts are correct, this could be a boon for “physical goods that spark joy — from comfort food to at-home spa kits,” as well as “experiential consumption, like prioritizing time for personal care or IRL face time with friends and family.”
Customers definitely have little patience for anything less than stellar experiences. Forrester found that about six in 10 US and UK consumers believed companies “should have figured out how to handle pandemic-related disruption by now.” These analysts saw brands investing in “the commerce building blocks of their experience architectures; order management, payments, and inventory control will make every touch a shoppable moment; investments in immersive experiences will turn browsing into virtual inhabiting; and subscription billing will make loyalty a business model pivot.”
Gaining insights from connected data makes the biggest business difference. By 2024, IDC forecasted 30% of Fortune 2000 companies will deploy next-best action across their omni-channel environment, driving demand for customer data platforms, omni-channel management, and customer service solutions.
Sustainable business is a priority
It’s impossible to separate the intertwined strands of customer experience, tech innovation, and sustainable business, especially when it comes to supply chains.
IDC analysts predicted that by 2023, 50% of all supply chain forecasts will be automated through AI, improving accuracy by five percentage points. Gartner analysts said 50% of global product-centric enterprises will have invested in real-time transportation visibility platforms by 2023. By the following year, IDC researchers saw 70% of manufacturers in global supply chains improving long-term supply chain profitability with investments in software tools to support sustainability and circular economy business models.
To improve delivery speed, agility, and visibility for B2B and B2C customers, IDC analysts said 35% of manufacturers will invest in order management software by 2024, resulting in a 25% improvement in OTIF (on-time, in-full) fulfillment. By 2025, IDC researchers predicted that 40% of G2000 organizations will invest in supply chain systems to increase information and inventory velocity to improve last-mile delivery efficiency and boost customer experience.
What’s striking about these predictions is that they’re expected to radically change the CPG sector in just a couple of years. The future has never been more transformational.